People Intelligence in London Boroughs: A report for the Association of London Government

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A catalogue of over 100 titles is available from IES, or on the IES Website, www.employment-studies.co.uk People Intelligence in London Boroughs: A report for the Association of London Government

Dilys Robinson The Institute for Employment Studies

The Institute for Employment Studies is an independent, apolitical, international centre of research and consultancy in human resource issues. It works closely with employers in the manufacturing, service and public sectors, government departments, agencies, and professional and employee bodies. For over 35 years the Institute has been a focus of knowledge and practical experience in employment and training policy, the operation of labour markets and human resource planning and development. IES is a not-for-profit organisation which has over 60 multidisciplinary staff and international associates. IES expertise is available to all organisations through research, consultancy, publications and the Internet.

IES aims to help bring about sustainable improvements in employment policy and human resource management. IES achieves this by increasing the understanding and improving the practice of key decision makers in policy bodies and employing organisations.

## Contents

1. Introduction 1 1.1 Background 1 1.2 This research 1

2. Research Findings 3 2.1 Introduction 3 2.2 Information requests 3 2.2.1 Internal requests 3 2.2.2 External requests 4 2.3 A key HR role? 5 2.4 Routine reporting 5 2.4.1 Nature of reports 5 2.4.2 How are reports received? 6 2.5 Data quality 6 2.6 Recruitment and retention hotspots 7 2.7 Data sharing and benchmarking 8 2.8 Evidence-based decisions 9 2.9 General issues raised by participants 10

3. Conclusions 12 3.1 Summing up 12 3.2 Recommendations 13

4. Introduction

1.1 Background

Local government is a labour-intensive sector, offering a wide variety of services to the public. The activities undertaken within local government require a multiplicity of skills and qualifications; a further complication is that customers are many and varied, with some being particularly vulnerable and in need of support. Around 60 to 70 per cent of a ‘typical’ borough’s annual expenditure goes towards staff, which is reason in itself to have good information about the workforce. The emphasis on efficiency and cost savings contained in the Gershon Review makes it even more essential for boroughs to have an in-depth understanding of the make-up and costs of their staff, while the Local Government Pay and Workforce Strategy 2005 highlights the need for good quality data to inform strategic and workforce planning.

1.2 This research

The Association of Local Government (ALG) asked the Institute for Employment Studies (IES) to carry out a small piece of research to investigate the ways in which London boroughs are currently using data about their workforce. The main driver for requesting this research was the response of London boroughs when requested by ALG to provide robust data for the recruitment and retention survey; ALG has noted that the provision of workforce data, in response to such staffing surveys, varies considerably by borough in terms of data quality and timeliness.

IES conducted the research by:

- interviewing, via the telephone, the HR Directors of four London boroughs, using a semi-structured interview guide
- facilitating a workshop of those responsible for providing and interpreting workforce data in seven London boroughs.

Attempts were made to secure interviews with one or more Chief Executives, but unfortunately there were no volunteers able to meet the request for an interview within the time-frame available. The research is set within the overall context of the requirements of the Local Government Pay and Workforce Strategy 2005, and is part of a wider study being undertaken by ALG. It is also linked to ALG’s work on recruitment and retention, and to the HR improvement programme. 2. Research Findings

2.1 Introduction

This chapter covers the broad areas discussed in the interviews and workshop, namely:

- internal and external requests for information about the workforce
- the positioning and status, within HR and the wider organisation, of workforce data guardianship and workforce information provision
- people intelligence reporting to management at different levels
- workforce data quality
- recruitment and retention ‘hotspots’
- workforce data to inform major decisions
- other relevant issues raised by participants.

2.2 Information requests

2.2.1 Internal requests

These come from a variety of sources, with the most important being managers at various levels. Typically, managers require information about their own staff, with sickness absence and pay being mentioned most often. The extent to which managers actively demand information, and take an interest in comparative data and trends, appears to vary by borough. In one borough, managers were described as ‘wanting to know more and more’, while in another, they ‘had to be guided’ to go beyond the standard reports, as they did not know what was available to them. Workshop participants believed that the level of the manager was far less important than his or her enthusiasm for and understanding of workforce information and its implications. There was general agreement, however, that ‘word gets around’ when a new system is implemented and new reports are available, and that this leads to an increase in requests for information. In addition to managers, the following groups of people were described as requesters of information, although each was only mentioned once:

- senior HR practitioners, who request information so they can support and/or challenge managers
- unions, where the interest is usually about specific issues, such as diversity
- the press/PR function, to gain material with which promote the borough positively to the external world, particularly the local population
- members, who in one borough were increasingly demanding information on which to base or justify decisions.

When asked specifically about the Chief Executive, the general consensus was that he or she would usually approach the HR Director for workforce information, perhaps following up any detailed queries with the relevant service head(s). Some, however, are a little more ‘hands-on’ and might even know who to approach direct in the HR team. Again, this seems to be a very individual preference; one Chief Executive was described as ‘information-thirsty’, while another had delegated workforce management entirely to senior managers.

### 2.2.2 External requests

Views on this area were variable. These were described as patchy and relatively few in number by some participants, while others indicated they received a relatively large number of requests. All interviewees and participants mentioned returns and surveys, requested by various bodies - ALG, Employers’ Organisation for Local Government (EO), Office for National Statistics (ONS) and sometimes other government departments. While acknowledging the value of the majority of these requests, many participants mentioned, and endorsed, the current discussions aimed at streamlining and standardising requests from public bodies by developing a core dataset.

Aside from this, there was some mention of the local press; here, relationships were very variable and appeared to be partly dependent on the quality of, and effort made by, the borough’s press/PR function. One borough’s HR Director was occasionally contacted by the HR publication ‘Personnel Today’, while others recalled rare occasions of requests from professional organisations and journals. The latter, however, were felt to be more likely to approach service heads, as the press tended to be more interested in the delivery of services than employment issues. 2.3 A key HR role?

There was general and emphatic agreement that workforce data guardianship and workforce information provision was part of HR’s core function, and was increasingly important. All boroughs participating in the research had between one and four individuals (though not necessarily full time) dedicated to such activity, and at least two participating boroughs had dedicated HR information teams. The status of these information specialists is generally high, and they are respected for their analytical skills. One HR Director described his specialists as ‘respected, responsive, customer-friendly and liked by line managers’. Another commented that data expertise was ‘greatly valued’; this HR Director was making an effort to grow such expertise internally, as it was a relatively rare commodity that he would otherwise have to buy in.

Despite the claims of HR system salespeople, HR information specialists are seen as a necessity; using reporting tools, and interpreting comparative and trend data, are not skills that can be easily acquired via occasional use.

HR Directors believe that analytical skills represent a required competency, although they felt this view was not shared by all HR practitioners. Workshop participants also felt that there was still an attitude that ‘this isn’t HR work’, and was an add-on rather than a core requirement.

2.4 Routine reporting

2.4.1 Nature of reports

All participating boroughs except one had a standard reporting cycle; the exception had recently acquired a new HR system, and was in the process of assembling a suite of standard reports. The frequency, content and format varies by borough. Some are entirely paper-based, while others also have an intranet system, sometimes with email alerts for particular managers. Typically, boroughs seem to have an annual profile that is widely distributed, and quarterly or monthly reports that are designed for managers and focus on operational issues such as turnover, sickness absence, and agency usage and costs. Summary information on these aspects are also provided for senior management and sometimes for members.

Boroughs all appear to be attempting to interpret the reports they issue, with particular attention being given to providing an explanation of comparative information and trends, and performance against targets, for senior managers and members. Most boroughs provide a straightforward written commentary, although one described a system of key indicators with interpretation focusing on exceptions.

When asked about the drivers for choosing the subject-matter for reports, all participating boroughs felt that they were cost-driven and also influenced heavily by Best Value Performance Indictors (BVPIs), which is why turnover and absence had assumed such prominence (although turnover is no longer an indicator). There is very little, if any, attempt to link reporting with strategic objectives; some labour market analysis is happening, although limited; and reporting that might highlight longer-term problems, such as retirement projections, are not seen as a priority.

2.4.2 How are reports received?

The general consensus was that the quality of debate about people intelligence at senior management and member level was variable — good, even approaching challenging in some places, less engaged and/or tending towards the naïve in others. Similar experiences were reported by boroughs experimenting with, or using, manager self-service for reporting; one borough said that their managers were unwilling to participate, while another had found a pilot scheme to be very popular. Participants with a private sector background felt that the quality of debate had been better and more sharply focused in their previous companies, but also that the workforce issues under consideration had been more straightforward, less multi-faceted and easier to tackle.

Once data quality has reached a satisfactory level (see below), there seem to be two key aspects influencing whether or not people intelligence reports are taken seriously within any particular borough.

- Of primary importance is the attitude of managers; champions are needed at the top of the organisation, plus a critical mass of interested managers at different levels.
- Secondly, the HR Director needs to have the necessary status (preferably, to be on the corporate management team) to push the importance of workforce issues and get them onto the agenda at senior manager and member level.

2.5 Data quality

Only one participating borough felt ‘Very confident’ in the quality of its data, but all the others reported that this aspect was ‘improving’ and that they were ‘much more confident than in the past’; however, there are ‘still improvements to be made’. Only a minority of participating boroughs were fully confident in the robustness of their measures to improve data accuracy. Much of the improvement that has been made is associated with getting a new system, which is an opportunity to take stock and do a proper data audit and cleanse. The prominence given to sickness absence in the BVPIs has led to huge improvements in the recording and timely reporting of this aspect, although it has also possibly distracted boroughs from taking a more strategic look at reporting.

It is encouraging to note that all participating boroughs said they had received support from the top of the organisation to improve data quality, often associated with getting a go-ahead for expenditure on a new HR system. However, the attitude of managers lower down in organisations was variable; some were very helpful, others compliant but reactive, and some, unfortunately, reluctant to take any responsibility for, or action about, workforce data. On a more positive note, employees were reported as being generally helpful and compliant when asked to check and amend their own data, during annual cleansing exercises. The Freedom of Information Act has also helped, as it has driven some boroughs to take data quality more seriously.

2.6 Recruitment and retention hotspots

All participating boroughs reported recruitment and retention difficulties with the following three groups:

- social workers
- planners
- environmental health officers.

In addition, the following groups were mentioned by some, but not all:

- legal, accountancy, audit and architectural professionals
- teachers, especially maths and science teachers for secondary schools
- trading standards officers
- highways engineers
- good quality senior staff in all disciplines.

In general, problems are flagged up by service heads who are experiencing difficulties in filling vacancies, but it is encouraging to note that anecdotal evidence is no longer accepted without some data to back it up. One borough stated, ‘We listen to people shouting but also use reports on turnover, average retention and vacancies’. Typically, evidence such as the number of re-advertisements, the number of applicants, the quality of the field and the ability to shortlist is sought before any remedial action is allowed. One borough had also noted general concerns about the age profile of applicants. Agency usage and expenditure is also monitored in some boroughs, although some said that this information is often difficult to uncover and understand.

Although participating boroughs have a good idea where their ‘hotspots’ are, there appears to be little corporate will to map recruitment and retention difficulties across the whole borough: ‘There isn’t really a corporate push to get information on these problem areas’. Any initiatives tend to be reactive, and confined to pockets of difficulty.

When planning action on recruitment and retention for ‘problem’ groups, the general consensus was that the HR role was to challenge assumptions, provide evidence and monitor any initiatives taken (such as recruitment and retention allowances and recruitment drives). One borough quoted an example of the Social Services Director wanting to increase salaries; however, the HR Director challenged the anecdotal evidence, and discovered that of 25 reported vacancies, attempts had been made to recruit to only 12 posts, and only a handful of these had needed to go to a second recruitment round.

One borough admitted that it was struggling with trying to get a fix on the best indicators to monitor recruitment and retention, and felt that this was an area where agreement between boroughs, via ALG, would be helpful. Suggested indicators were vacancy rates (although this was tricky in areas where there were no fixed staffing establishments, so the concept of a ‘vacancy’ did not really exist), agency expenditure and usage (not always easy to find out), employee opinion, time taken to recruit, and need to re-advertise.

### 2.7 Data sharing and benchmarking

In general, there seems to be little information shared between boroughs, aside from the staffing surveys and returns organised by ALG. Several participating boroughs mentioned that boroughs felt themselves to be in competition for staff: ‘London boroughs are not very good at sharing information — it’s more competitive than the private sector!’. Some informal information sharing was believed to be undertaken at service head level, but relatively little by HR. One borough reported a degree of information exchange with a neighbouring borough; another had withdrawn from a sharing arrangement because its own data was felt to be much better than that of its neighbours, so little benefit was being gained.

ALG’s comparative information was valued by participants, and participants were also very appreciative of ALG’s attempts to establish common definitions. Turnover, absence and salary data were now felt to be reliably comparable across London boroughs. There was considerable support for further action in establishing common definitions and sharing information, especially on recruitment & retention and training & development, and participants wanted this activity to be organised by ALG. One borough suggested that, rather than surveys on specific issues, a standard census-type return could be made to the ALG on a regular basis, so that the data could be manipulated in different ways.

2.8 Evidence-based decisions

The general view of participants was that evidence was always sought before major decisions involving the workforce were implemented, although not always early enough; there was still a tendency to rationalise post hoc, i.e. to look for evidence to support a decision that had already been made in principle. This still represents a big leap forward, however, compared to even a few years ago, when evidence would follow a long way behind, if at all: ‘It isn’t awful now’ and ‘The final decision would be made with data’. Some examples are given below.

- In one borough, a proposal to change the recruitment and retention package for social workers went to members accompanied by a considerable amount of supporting evidence; encouragingly, members asked for yet more evidence before coming to a decision.

- Another borough gave an example of a cost-benefit analysis to find out whether offering a free travel card from the first day of employment, rather than after a year of service, would be beneficial. The results indicated that, for a relatively small outlay, this would be a big recruitment incentive.

- One borough described how evidence about the relatively low number of minority ethnic support staff in schools had led to a targeted recruitment drive.

- A similar analysis in another borough had led to a targeted management development programme for women and minority ethnic staff.

- Another analysis of disabled staff had led to an investigation to find out why disabled applicants had been unsuccessful at recruitment.

- There was general consensus that recruitment and retention benefits such as golden hellos and flexible benefits would not be implemented without supporting data, whereas anecdotal evidence might have sufficed in the past.

Despite the above encouraging examples, a systematic approach to providing a series of reports to evaluate the success of any decisions still appears to be the exception rather than the rule. 2.9 General issues raised by participants

At the end of the interviews and the workshop, participants were invited to make additional comments or further suggestions. The following list summarises the points made.

- ALG should continue in its efforts to stress the importance of good quality people intelligence.
- HR’s profile will greatly increase via the production of good and relevant people metrics.
- Managers take people metrics, and people management, more seriously if the HR Director is on the corporate management team; this is really important for ensuring a quality debate at senior level about people issues, and for the credibility of the function generally.
- Although the degree of interest and involvement displayed by members varies by borough, raising member awareness about people issues appears to bear fruit; member questions lead officers to take issue much more seriously.
- Operational managers often see HR as hindering rather than helping, and as being too focused on compliance. Good quality metrics and a readiness to challenge and debate will lead to more respect.
- HR practitioners have some way to go in terms of the acquisition and use of analytical skills, but these are increasingly seen as a core HR competency.
- Investment in good technology, and the people to implement and maintain systems, is very important, but participants felt that some boroughs lagged a long way behind on this issue and are therefore really struggling.
- Although some movement towards manager self-service via the intranet is achievable, for example for standard reports and absence alerts, it is not possible to hand over entirely to managers because any non-standard reporting requires expertise in enquiry tools and interpretation of information.
- The HR Directors participating in this research were on the whole more optimistic than workshop members, who are responsible for providing and interpreting workforce data. This may be because HR Directors can see a clear progression path ahead, but it may also be possible that practitioners, who deal with managers on a day-to-day basis, are more realistic.
- At the workshop, there was general agreement that it would be helpful to have a set of key indicators for people management, perhaps agreed between boroughs and ALG, which were recognised as the core things about people that all managers were required to understand and monitor. Although participants felt that the current direction with regard to people intelligence was positive, and that things were improving, there was a concern about the lack of a longer-term perspective. The political context in which local government operates is believed, by some participants, to impact negatively on overall strategic direction.

3. Conclusions

3.1 Summing up

There is no doubt that, based on the views of participants in this research, London boroughs are improving in their understanding and use of people intelligence. New systems are being implemented, and several boroughs are using the intranet to engage managers more closely. BVPI requirements have led to improvements in data collection, recording and analysis, particularly on sickness absence, and the Freedom of Information Act has also influenced boroughs to take data quality more seriously. Major decisions affecting the workforce are now very unlikely to be made on the basis of anecdotal evidence alone, and the HR function is becoming more analytical and more willing and able to challenge managers.

Having listed the positives, it is also clear, and acknowledged by participants, that there is still some way to go. This is by no means unique to local government; HR practitioners in many sectors are wrestling with the best ways of using people intelligence to manage their staff and plan for the future. In IES’ experience, workforce analysis is one of the areas where the public sector often does better than the private sector, although there is also considerable evidence that some companies (notably the Royal Bank of Scotland and Nationwide) have woken up to the competitive advantages that good quality, in-depth understanding of the workforce can bring.

It is apparent that improvements in reporting and information use are achievable within local government; the recent prominence given to sickness absence has led London boroughs to think seriously about the information required to manage attendance properly. This suggests that a sustained push on workforce issues from the top of the organisation (members and the corporate management team) is likely to lead not only to better information but to a debate about current and future people management. As decision-makers within organisations learn more about the data available to them, and the potential of new systems to provide better reports, the demand for good quality people intelligence should improve. In the meantime, this research suggests that some boroughs are still struggling with poor systems, many HR practitioners have difficulties with analysis and numeracy and are unwilling to see these as core HR competencies, and not all boroughs are able to influence the agenda by having the HR Director as a member of the corporate management team. The focus on BVPIs and cost savings tends to distract from strategic objectives, while the political dimension can lead to longer-term issues (such as future retirement bulges and projected age imbalances) being given very low priority. Operational reporting has improved, but there seems to be little attempt to translate organisational strategic objectives into workforce analysis and monitoring action.

While expertise in data extraction, analysis, information presentation and interpretation has improved, there is a tendency for reports to be generated from readily available data, rather than being based on an analysis of the information requirements necessary to support effective people management and to monitor progress towards organisational objectives. Boroughs are, for example, not very confident about their workforce planning expertise. On the basis of this small piece of research, it appears unlikely that any borough would be able to confidently respond positively to all of the following list of questions in ‘The Local Government Pay and Workforce Strategy 2005: Transforming your authority — creating real and lasting change’.

- Are you regularly reviewing and analysing your workforce needs to prepare for future circumstances?
- Do your key plans and strategies identify and address the workforce implications?
- Have you identified key areas where you have future potential skills shortages?
- Are you taking action with local partners and other authorities, to address these skill shortages?
- Are you taking action to address areas of high staff turnover?
- Have you got skills pathways in place to ‘grow your own’ future workforce?
- Are you making use of e-recruitment?

### 3.2 Recommendations

- Boroughs should continue to work with ALG, via the recently-established Workforce Data Group, to establish definitions, provide common workforce data and share information. The publication and wide circulation of comparative indicators should help to increase perception and understanding of people intelligence throughout local government in London. In particular, now that ‘vital workforce data’ (numbers, grades, age, status, ethnicity and gender) has been tackled for accuracy, boroughs should concentrate on occupational data (i.e. the classification of jobs and people into sensible, usable groups for reporting and planning). Decision-makers should be moving from simply asking whether they have too many or too few employees today, to whether they have the right balance of skills and employment mix to meet future strategic aims.

- Developing capability in workforce reporting and planning, however, should be primarily active and internally-driven, not just a response to external enquiries and assessment. As a first step, all boroughs should audit their understanding of the workforce using ALG’s newly-developed ‘innocence to excellence’ diagnostic tool. This tool looks at different aspects of people, process, data, reports and decisions, all of which can be scored on a five point scale: ‘innocence’, ‘awareness’, ‘understanding’, ‘competence’ and ‘excellence’. This research would suggest that most boroughs are currently around the ‘awareness/understanding’ level for most aspects, with some signs of ‘innocence’ and some of ‘competence’, but very little evidence yet of ‘excellence’.

- Boroughs should examine their existing capability with regard to workforce information and planning – both within HR and throughout the wider organisation. HR systems need continuing investment to be useful as a core management tool; HR practitioners require training and development in understanding, producing, analysing and interpreting workforce data; and managers at all levels need the skills to understand and act upon the reports they receive.

- Having achieved organisational buy-in to the need to improve data collection and recording of operational issues such as absence and turnover, boroughs should now plan how they are going to start thinking about more strategic, longer term people intelligence, and what sort of evidence they are going to produce to evaluate their workforce decisions. This requires a thorough understanding of organisational objectives and priorities and their implications for the workforce, and competence in workforce planning and modelling. Boroughs that have not already done so should consider, and clearly state, what information they need to support people management and achieve key objectives, both currently and in the future.